Ask most investors where they are looking to invest these days and most will tell you that some of the best opportunities are here in the good old US and many of these investors are European. According to Investment News, European pension funds and their equity managers are increasing their exposure to the US, according to pension fund consultants, managers and officials. And the uncertainty surrounding the euro and its impact on euro zone economies is pushing investors faster into the arms of Uncle Sam.

Many investors are particularly attracted to US small-caps, where valuations are attractive and, according to research published by Furey Research Partners Less than 20% of publicly traded small-cap revenue comes from outside the US. But it’s not just earnings that matter, it’s valuation. Small-cap companies are typically priced into future earnings that can be very sensitive to US GDP growth. This is where a good active manager can really add tremendous value, as a good small-cap manager will look for companies with sustainable growth and have historically shown some resistance to the US economy, such as the utility sector.

The other reason to pay attention to US small caps is that the market may be trying to price in another round of quantitative easing from the Fed and either love it or hate it, as the old saying “don’t fight against the Fed” really applies to the small-cap space. As in the last two rounds of QE, the Russell 2000 Index is up an average of 20% over the next three months and more than 40% over the next six months (the Russell 2000 is by far the most common benchmark for mutual funds). that self-identify as “small-cap” while the S&P 500 Index is used primarily for large-cap stocks).

While there are still risks to the US economy, many US companies have accumulated an ample supply of cash on their balance sheets, allowing them to increase growth through mergers and acquisitions. According to a Wall Street Journal article dated January 1. A survey by Ernst & Young, conducted on February 2, 2012 and titled “On Wall Street, Renewed Optimism for Doing Business,” anticipates that “36 percent of companies plan to make an acquisition this year.” With many CEOs of publicly traded companies under pressure to increase shareholder value, acquiring a smaller company with higher growth rates and technological innovation seems like a smart way to go.